Bank Sarasin (Geneva) shorts America

By davidpetraitis, on December 3rd, 2010

As we postulated, the IRS continues to aid the US trade imbalance by motivating investors to flee American stocks and bonds. Today Sarasin Bank announced, as covered by Le Temps Geneva (in French – my translation) that it had written its customers that it is suspending all trading in American companies equities, in addition is counsels its customers to do the same (!) (hat tip to Andy Sundberg for pointing out this article):

Sarasin says farewell to America

byline: François Pilet

The bank quits North American Equity

Bank Sarasin, a subsidiary of Dutch Rabobank since 2007, will no longer deal in U.S. securities. In a letter sent to clients late November of which Le Temps has obtained a copy, the bank warns that “it has renounced any direct investment in shares of U.S. companies.” The reason cited: “the intensification of regulation in the United States and the hardening of U.S. tax law.”

Inheritance tax

“We recommend our customers to do the same and sell U.S. stocks and bonds,” says the spokesman of the bank, Benedikt Gratzl. According to him, the letter had no purpose other than to inform customers about this “policy decision” of the bank. “If a customer wants to keep U.S. securities that is up to them,” adds the spokesman, however, he advises the use of investment funds or structured products.

At issue, according to the bank, are new provisions allowing the IRS to levy estate taxes on securities deposited in Swiss banks. Beyond a threshold of 60,000 dollars, the U.S. rate applied to the heirs can be up to 45%. Unlike many European countries, Switzerland has not signed a bilateral agreement to limit the tax.